The Naira has failed to appreciate against the US dollar at the foreign exchange market despite the Central Bank of Nigeria’s recent additional release of $10,000 to Bureau De change operators.
FMDQ data showed that the Naira recorded another drop to N1308.52 per Dollar on Wednesday compared to N1,300.15 exchanged on Tuesday.
On a day-to-day basis, this represents an N8.37 drop from N1,300.15 per Dollar it traded on Tuesday.
In the parallel market section, the Naira was sold at between N1,250 and N1,300 on Wednesday from N1230 on Tuesday.
The development comes despite the Central Bank of Nigeria releasing 10,000 dollars each to BDC at N1,021 to a dollar with a caveat to sell at most 1.5 per cent above the bought price.
This is the third recent intervention for BDCs amid the bank’s effort to defend the Naira.
However, despite the FX rate record, the official window rate still surpassed the parallel market by N8.52.
Meanwhile, on Wednesday, the National President of the Association of Bureau De Change Operators of Nigeria, Aminu Gwadabe, blamed peer-to-peer cryptocurrency platforms like Binance for the recent depreciation of the Naira against the Dollar in the foreign exchange market.
In recent days, the Naira has slumped six times against the Dollar in the foreign exchange market.
The naira gained at the official market, trading at N1, 278.58 to a dollar on Tuesday.
Data from the official trading platform of the FMDQ revealed that the naira gained N30.81 or 2.35 per cent, compared to the previous trading date on Thursday, March, 28, 2024 just before the Easter holiday at the rate of N1,309.39 against the dollar.
However, the total turnover reduced to $111.18 million on Tuesday, down from $857.78 million recorded on Thursday, March 28, 2024.
Meanwhile, at the Investor’s and Exporters’ window, the Naira traded between N1,312.00 and N1,250.00 against the dollar.
The supply of US dollars surged at the official foreign exchange market, rising to 180.59 per cent to $440.13 million last Friday as commercial banks rushed to avoid the Central Bank of Nigeria’s regulatory sanction.
This comes as the Naira appreciated marginally to close Friday at N1,435.53 per Dollar after a turbulent week.
Data from FMDQ Security Exchange was disclosed on its official website at the close of work on Friday.
Similarly, the Naira recorded a gain in the parallel market last week, which traded at 1,440 per US dollar on Friday from N1,470 on Thursday last week.
Last week, the CBN issued a circular titled “Harmonisation of Reporting Requirements on Foreign Currency Exposures of Banks”, expressing worry over the growing trend of banks holding large foreign currency positions.
Consequently, the apex bank mandated that banks’ Net Open Position, NOP must not exceed 20 per cent short or 0 per cent long of the bank’s shareholders’ funds going forward.
Nigeria’s currency, the Naira, appreciated against the US Dollar in the foreign exchange markets on Thursday.
Data from the official FMDQ market indicated that the Naira closed on Friday at 780.14 Naira per US Dollar, representing a decrease of 216.61 Naira from the previous day when it traded at 996.75 Naira per US Dollar.
In the parallel market, the Naira was exchanged for 1130 Naira per US Dollar on Thursday, down from 1140 naira the previous day.
Dayyabu Mistila, a Bureau de Change operator at Zone 4 Abuja, disclosed that Nigerians bought Dollars at N1100 on Friday, down from N1140 on Wednesday.
Similarly, at the Binance P2P market, the Naira stood at 1054.2 Naira to the USD on Saturday morning.
The development comes barely 24 hours after a report emerged that the Central Bank of Nigeria had vowed to clamp down on currency speculators.
Naira strengthened against the Dollar when the Central Bank of Nigeria cleared forex backlogs to some commercial banks and airlines last week.
The naira on Monday exchanged at N461.50 to the dollar at the Investors and Exporters window.
The figure represented a decrease of 0.05 per cent compared with the N461.25 it exchanged after the close of business on February 18.
The open indicative rate closed at N461.60 to the dollar on Monday.
An exchange rate of N462.06 to the dollar was the highest rate recorded within the day’s trading before it settled at N461.50.
The naira sold for as low as N440 to the dollar within the day’s trading, with $40.28 million traded at the official Investors and Exporters window on Monday.
Central Bank of Nigeria (CBN) is unlikely to devalue the naira, despite rising demand for the dollar at both official and parallel markets, The Nation has learnt.
A report by Augusto & Co. titled: “2022: The Story So Far & What Lies Ahead”, said the naira, which started this year at N567/$ at the parallel market, now exchanges at N707/$. It is N416.37/$ at the official market.”The report added that the declining value of the local currency “has pushed up the exchange rate premium between the official and parallel markets to N290.63/$.
”The last devaluation of the naira was in May 2021, when the CBN adopted the Nigerian Autonomous Foreign Exchange Rate (NAFEX), also known as the Investor and Exporter (I&E) forex window rate, as its official exchange rate to the dollar.The report read in part: “We do not expect the CBN to officially devalue the exchange rate despite sustained pressure. At the official market, we expect the naira to hover between N419/$ and N425/$ through the end of 2022.The persistent swings and volatility of the naira exchange rate have worsened in recent time. It began a wild race on July 19, depreciating by 16 per cent to N717/$ on July 28 before appreciating to N707 on July 29.
”The report explained that election-related uncertainty will severely limit capital inflows in the remaining months of 2022, even if domestic interest rates rise further.The Agusto & Co. report noted that long-term inflation is one of the exchange rate stoking factors, adding that the differential between two countries’ long-term inflation rates would be mirrored in the exchange rate depreciation between both nations.In other words, the long-term rate of inflation of the naira compared to that of the US Dollar plays a significant role in what the value of the Naira would be relative to the dollar.This, it predicted, will also impair CBN’s ability to intervene in the foreign exchange market, hence, the reserves level will stabilise at about $41 billion by the end of 2022.Since the Naira has a higher long-term rate of inflation (12 per cent) compared to the US Dollar (two per cent), it is a weaker currency and will depreciate by approximately 10 per cent,” it said.The report enumerated three major mechanisms for exchange rate determination, namely, pegged exchange rate system, floating currency, and a crawling peg.It explained that although each of the options has its own shortcomings, a crawling peg option is more suitable for Nigeria.
As a result, external reserves accretion, which has been ostensibly triggered by the CBN’s interest rate hike, is expected to be constrained.An Economist and Managing Director, Financial Derivatives Company Limited, Bismarck Rewane, said the naira surprised speculators and market watchers by appreciating by 1.5 per cent from N718/$ to N707/$ on Friday.“Most analysts were fearing that an N1000/$ was within shouting distance. As unpalatable as N707/$ may sound, some Nigerians are breathing a sigh of relief. The reason for this respite is mainly because of a naira crunch,” he explained.
He said there is temporary resistance at N718/$ and a market correction which means the naira may appreciate N695/$ before falling again.These are technical movements which do not address the fundamental weaknesses in the Nigerian forex market and the short supply of dollars from the CBN and exporters. That means, there is a limit to how much naira is available in the system,” Rewane said.
ADELANI ADEPEGBA writes that the opposition Peoples Democratic Party’s presidential primary turned out to be a dollar bazaar as aspirants on the eve of the convention competed to woo delegates
The dollar rain at the Peoples Democratic Party presidential convention in Abuja on May 28 was not unexpected. The stakes were high, tension was fever-pitch. The 14 candidates were ready to deal. For the 764 delegates, the financial windfall was their reward from the transactional primary disguised as participatory democracy, and they were not disappointed. While addressing delegates, most of them paid no attention to the party’s manifesto and how they would rescue the country.
Among the presidential aspirants were a former vice president, state governors, ex-governors, former senate presidents, businessmen, and a publisher.
Atiku Abubakar, the perennial presidential contestant, did not leave anyone in doubt about his resolve to take the prize, regardless of the price. His camp has yet to deny reports that he doled out about $20,000 to each delegate to best his closest rival. He subsequently emerged the PDP candidate with 371 votes.
Atiku was believed to boast a huge war chest made possible in part by his stint in government. Even though, he has been unable to deodorise or stamp off the foul smell of corruption allegations swirling around him.
Atiku’s closest challenger, Governor Nyesom Wike of Rivers State, came second with 237 votes. Like other contestants, the governor had toured various states to seek support from the delegates. With the swagger of an emperor who could do no wrong, Wike had written off other aspirants, even as he announced to anyone who cared to listen that he was the only person that could win the presidential poll for the opposition party. Wike’s camp was said to have packaged $10,000 for each delegate in a desperate bid to clinch the coveted party ticket. On failing to achieve his dream, the governor, who stormed the MKO Abiola stadium with no fewer than 25 buses decorated with his campaign banners, quietly left the venue.
The Economic and Financial Crimes Commission had, a few weeks ago, declared the Rivers State Accountant-General, Fubara Siminayi, and 58 others wanted for N435bn fraud, money laundering, misappropriation of public funds, and abuse of office. For those who may not know, Siminayi, who is Wike’s protégé, just clinched the PDP governorship ticket and may emerge the next Rivers governor in 2023.
A former Director-General, Nigeria Maritime and Safety Agency, Dakuku Peterside, alleged that Wike spent N30bn state funds on delegates during the PDP primary.
“Wike donated about N10bn of public funds in unsolicited charity to states, and about N20bn pursuing his ill-fated presidential bid,’’ the former federal lawmaker claimed.
However, the governor’s spokesperson, Kelvin Ebiri, dismissed the allegations as spurious.
Atiku’s spokesman, Paul Ibe, also denied that his principal bribed delegates, attributing his victory to “hard work and the unity speech.”
He stated, “I can tell you outright that it is false in its entirety, it is not true. Maybe you want to know why Atiku won; I would tell you. Atiku won because of his message, the agenda he has for Nigeria, about security, about unity and education, the economy and devolution of powers and all of that are encapsulated in what is known as the unity speech.
Saraki and Governor Udom Emmanuel of Akwa Ibom were also not left out of the zero sum game as they also allegedly wooed the delegates with their wallets. The only female in the race, Oliver Diana, and another contestant, Sam Ohuabunwa, scored one vote each; a former President of the Senate, Pius Anyim, scored 14 votes while Bauchi State Governor, Bala Mohammed, scored 20 votes. The other contestants – ex-governor Ayodele Fayose and Ovation Magazine publisher, Dele Momodu – got zero votes.
Curiously, men of the Economic and Financial Crimes Commission appeared at the scene in their red jackets looking for evidence of vote-buying and checking Ghana-must-go backs laden with ballot papers. Observers said the EFCC was merely playing to the gallery as they knew what to do if they were serious about tracing the thousands of greenbacks that exchanged hands before the voting exercise. Their appearance at the PDP convention was described as sheer buffoonery.
A spokesman for the EFCC, Mr Wilson Uwujaren, explained that the officials of the commission stormed the presidential primary elections to monitor delegates’ inducement and financial malpractices.”
However, delegates, who spoke on strict condition of anonymity, said the sharing of money took place at hotels and well-guarded locations.
“Some of the aspirants are serving governors. We were flown in from different states. Do you think it is at the venue that we will be given money? The EFCC are just jokers.
“They are even wearing uniforms. Why didn’t they wear mufti? I am sure they will not go to the APC primaries. The serious aspirants have reached out to us and have done the needful,” said a delegate from Lagos.
He stated, “States like Lagos, Osun, Kaduna and others that have no governor are the ones that are collecting money from all the aspirants. They can make as much as $30,000 from different aspirants because they are swing states.’’
Appalled by the monetisation of the process, one of the aspirants, Mohammed Hayatu-Deen, a former Managing Director of defunct FSB International Bank, withdrew from the race on Saturday morning.
A past President of the Pharmaceutical Society of Nigeria, Sam Ohuabunwa, observed that the delegates could not resist the $10,000, $15,000 and $20,000 offered to them by the ‘’four leading contestants,’’ during the presidential special convention. According to him, the effect of money was overwhelming in the choice made by delegates.
He added, “In the current dispensation, a few members of a party are involved in the determination of the fate of the aspirants. They now deal in and distribute major international currencies, especially the dollar.
A policy analyst, Charles Onunaiju, called for a rethink of the democratic process so that it could be value-driven and owned by the citizens.
No respite yet for Naira at the foreign exchange (FX) market, two weeks after the introduction of a new FX policy tagged “Naira 4 Dollar” scheme by the Central Bank of Nigeria (CBN).
Naira at the Investor and Exporter window on Friday closed the week, trading at N410.05 per dollar. This represents a slump by 0.26 percent or N1.15 when compared to the rate of 408.90 it opened on Monday, 15 March.
When compared to the N409.67 per dollar it closed after Thursday’s trading, Nigeria’s currency lost in value by 0.08 percent, according to data from the FMDQ Security exchange.
During Friday’s trading Naira exchange at a low of N394.00 and a high of N412.
Similarly, the foreign exchange turnover declined 8.36 percent week-on-week to $46.43 million at the close of the trading week on Friday, from $50.67 million recorded on the opening day of the market, data compiled by Ripples Nigeria from the FMDQ indicated.
The low liquidity again shows a continued persistence of dollar scarcity in the country amid increasing demand by end users.
MTN Nigeria last week blamed the dollar scarcity for its inability to repatriate profits to its parent company.
However, at the unofficial black market Naira remained unchanged throughout the week from the N485 per dollar it opened the week data from Aboki fx shows.
Following Friday’s trading the official market rate and unofficial difference remains at over N70 it opened the week.
Financial experts and businessmen have criticised the “Naira for dollar” incentive initiated by the Central Bank of Nigeria (CBN). The apex bank had directed deposit money banks to reward beneficiaries of diaspora remittances.
In a memo dated March 5, 2021, the CBN directed commercial banks to pay recipients of diaspora remittances N5 for every one dollar in a bid to channel foreign exchange into the official market.
The incentive is also a drive to reduce inflow of dollars into the black market where rates are higher. While the CBN expects the Naira for dollar incentive to boost participation in the official exchange market, financial analysts and businessmen think otherwise.
Financial planner, Kalu Aja, in his reaction to the CBN incentive, said the action by the apex body doesn’t line up with its policy. He said CBN should devalue the naira in order to match with the black market price.
“Clearly the CBN wants Dollar inflow. It has devalued, it has prohibited, it has issued numerous circulars. However it has offered to sell its biggest contributor of FX to Mr Dangote in Naira not $ (dollar). Actions do not line up with policy.” Aja said in a note on his Twitter platform.
In his series of comments, Aja said, “CBN is not blind. The black market rate is higher than the CBN rate. Why would anyone send $ (dollar) via official means?If you want access to the diaspora funds, then devalue your currency to match the “street”. The laws of men cannot usurp the laws of economics.”
Aja added, “Remember the $ (dollar) CBN rate of N140 excludes the demand of 44 banned items. The black market $ (dollar) rate includes the full demand from all importers in Nigeria. The CBN exchange is artificial. If u can receive cash in $ (dollar) and sell to who I prefer, why is there an official rate?”
“On numerous wassapp (WhatsApp) groups, you see messages like”I have $5000, need N (naira)”. Those transactions are concluded in private.Paying N5 will not move those transactions to banks. 44 items are still banned from CBN fx auction, CBN told them to “go source their forex” They have. Why N5?” Aja said.
Another critic of the CBN initiative, Aloy Chife, Managing Partner or Saana Capital, said as long as gap remains between the official rate and black market, the incentive will not result to projected outcome.
Chife advised that the Naira should be floated, “As long as the delta between the official rate and the parallel market rate of the Naira remains negative, incentives like the CBN BOGOF (buy one get one free, or thereabouts) will not move the needle.
“Float the Naira. Let’s swallow the bitter pill in one gulp.” Chife suggested in a comment he made in reaction to the CBN naira for dollar incentive.
Naira put up a poor performance against the dollar at the Investors and Exporters (I&E) window on Wednesday as trading closed at N394.17k per dollar.
This represents a 0.21 percent drop or 82 kobo loss when compared to the N393.35k per dollar that it exchanged for on Tuesday, according to data from FMDQ Securities Exchange Plc.
Although, at the black market, Naira remained steady in value to the dollars at N475/$ after two days trading.
According to analyst, the depreciation of dollars in the official market was attributed to strong demand for dollar by the end-users to meet their obligations.
Similarly, data from FMDQ Securities Exchange Plc shows that forex turnover rose to $89.50 million on Wednesday from $26.83 million recorded on Tuesday.
This suggests an increase in dollar inflow from Foreign Portfolio Investors (FPIs).
The chairman of the Presidential Economic Advisory Council on the market, Doyin Salami, wants Nigeria to develop a forex policy that allows the economy to grow.
For the past 10 months, the foreign exchange market has been under pressure following a sharp drop in oil prices occasioned by the COVID-19 pandemic.
The Central Bank of Nigeria had in the last weeks moved to clear the huge backlog of foreign exchange demand.
Forex turnover dropped by 37% as Nigeria’s exchange rate at the NAFEX window depreciated against the dollar to close at N386/$1 during intraday trading on Wednesday, September 30.
In contrast, the naira appreciated against the dollar, closing at N465/$1 at the parallel market on Wednesday, September 30, 2020, as the pressure on the forex market dropped due to independence day activities.
Parallel market: At the black market where forex is traded unofficially, the Naira appreciated against the dollar to close at N465/$1 on Wednesday, according to information from Abokifx, a prominent FX tracking website. This represents a N5 gain when compared to the N470 that it was exchanged for on Tuesday, September 29.
Currency developments
The local currency has strengthened by about 7.8% within the last one week at the black market, as the CBN introduced some measures targeted at exporters and importers, in order to try to boost the supply of dollars in the foreign exchange market, and reduce the high demand for forex by traders.
The CBN has sold over $250 million to BDCs since the resumed forex sales on Monday, September 7, 2020. This was expected to inject more liquidity to the retail end of the foreign exchange market and discourage hoarding and speculation.
However, the exchange rate against the dollar has failed to sustain the initial gains made, after the CBN announced plans to provide liquidity.
BDC operators have urged the apex bank to reconsider the margin allowed for the currency traders, as it was inadequate to meet their expenses.
We also noted that forex traders monitored during the previous week, appeared to hoard forex, as they anticipated further depreciation in the market.
There has been a drop in speculative buying of foreign exchange, although demand backlog by manufacturers and foreign investors still puts pressure, and creates a volatile situation in the foreign exchange market.
NAFEX: The Naira depreciated against the dollar at the Investors and Exporters (I&E) window on Wednesday, closing at N386/$1.
This represents a 25 kobo drop when compared to the N385.75 that it exchanged for on Tuesday, September 29.
The opening indicative rate was N386.59 to a dollar on Wednesday. This represents a 9 kobo drop when compared to the N386.50 that was recorded on Tuesday.
The N386 to a dollar is the highest rate during intraday trading. It also sold for as low as N380/$1 during intraday trading
Forex turnover: Forex turnover at the Investor and Exporters (I&E) window, declined by 37% on Wednesday, September 30, 2020 .
According to the data tracked by Nairametrics from FMDQ, forex turnover dropped from $120.51 million on Tuesday, September 29, 2020, to $75.83 million on Wednesday, September 30, 2020.
The CBN had in the past few weeks moved to clear the huge backlog of foreign exchange demand, especially by foreign investors wishing to repatriate back their funds.
The drop in forex supply reinforces the volatility of the foreign exchange market. The supply of dollars has been on a decline for months due to low oil prices and the absence of foreign capital inflow into the country.
The average daily forex sale for last week was about $169.93 million, which represents a huge increase from the $34.5 million that was recorded the previous week.
Total forex trading at the NAFEX window in the month of August was about $857 million, compared to $937 million in July.
According to Reuters, the naira could weaken at the black market this week following the cut of interest rate by the CBN after the MPC meeting to boost credit as it works to stimulate the Nigerian economy that is heading towards a recession.
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